There are lessons to be learned from Subway and its former pitchman

Former Subway pitchman Jared Fogle, who famously lost 200 pounds on a Subway diet and exercise, is scheduled to plead guilty Wednesday to federal charges of distributing child pornography and illicit sexual conduct with a minor, according to court documents released by U.S. prosecutors. Subway fired Fogle, 37, earlier this year when federal authorities first raided his home. “There’s a risk in tying your brand to a person,” says Wendy Patrick, San Diego State University business ethics lecturer and attorney. “If you are going to hire people off the street, you run a risk that they might embarrass the company.” Last April, before the charges were made, Subway chief marketing officer Tony Pace told MediaPost.com, “Jared is inextricably linked with our brand. He’s a real, authentic person, and it’s important that we retell his authentic story, because some younger people might not know the original story.” However, Subway did respond swiftly to the charges, Patrick says. “He was almost instantly scrubbed from the Subway website.” One solution: find a fictional character: Insurance company Geico’s mascot, a talking Gecko, and McDonald’s longtime frequent pitchman Ronald McDonald avoid this kind of problem, she adds.

Here are 10 other endorsement deals gone bad:

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Southwest Airlines Co.
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had a less scandalous split than Subway, as it involved little more than a paint job. The airline and SeaWorld
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announced last year that they were ending a relationship that began in 1988 after the animal rights group People for the Ethical Treatment of Animals put pressure on the airline. The agreement included painting Southwest planes with dolphins, penguins and other wildlife from SeaWorld. Over 32,000 people signed a petition via online forum Change.org entitled, “Stop Promoting SeaWorld Animal Cruelty.” (SeaWorld and Southwest declined to comment on the reasons for the decision; a spokesman for SeaWorld said a documentary alleging mistreatment of animals was “inaccurate and misleading.”) Robin Merritt from Edwardsville, Ill., who started the Change.org petition, claimed victory: “I love Southwest, but I stopped flying with them when I learned about their partnership with SeaWorld.”

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Kate Moss and Chanel and H&M

ESTIMATED VALUE OF DEALS: $7 MILLION

When British supermodel Kate Moss was splashed across the front page of the “Daily Mirror” tabloid in the U.K. allegedly snorting cocaine, more than half-a-dozen companies distanced themselves from the scandal by dropping Moss from their campaigns in 2005. They included Chanel and H&M . Moss was earning around $7 million a year at the time of scandal, but she quickly bounced back. Yves Saint Laurent continued to support Moss, who was the face of the fashion house perfume Opium. Despite the short-term loss of some contracts, the fashion industry rallied around Moss. In December 2005, French Vogue devoted an entire issue to Moss. Just one year after the scandal, Sarah Doukas of the U.K.-based Storm Modeling Agency, who discovered Moss, told the BBC the supermodel’s earnings had doubled from £2 million ($3.4 million) to £4 million ($7 million). “All press actually is good press in this world we live in,” Doukas said.

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Susan G. Komen and KFC

ESTIMATED VALUE OF DEAL: $4.2 MILLION

After the success of its ubiquitous pink ribbon campaign, Susan G. Komen launched a co-branding campaign with KFC in 2010 called “Buckets for the Cure.” KFC donated 50 cents for every pink bucket sold and donated $4.2 million to Susan G. Komen after 5,000 restaurants participated in April and May of that year. But the partnership was short lived after nutritionists (and the media) pointed out that the KFC fast-food chain is not the best match for the breast cancer charity, which aims to provide funds for education about and research into breast cancer. One reason: Eating a high-fat diet and being overweight are two risks associated with the risk of breast cancer. Komen reached “hundreds of thousands of people” as a result of the campaign, Mark Nadolny, CFO at Komen, said at the time.

Nike

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Michael Vick and Nike

ESTIMATED VALUE OF DEAL: $40 MILLION

National Football League quarterback Michael Vick pleaded guilty to funding a dog-fighting ring in 2007 and served 18 months in prison. Reeling from lost endorsements — including a reported $2 million endorsement deal with Nike — and his NFL salary estimated at $130 million over 10 years, Vick filed for Chapter 11 bankruptcy in 2008. Vick didn’t have the same wholesome appeal as Major League Baseball star Derek Jeter or National Basketball Association star Michael Jordan, but the scandal likely cost him $40 million in lost deals, says sports business expert Robert Tuchman, founder of consulting firm TSE Sports & Entertainment. Vick signed a six-year deal with the Philadelphia Eagles in 2011, reported to be worth $100 million, and re-signed with Nike for two years in 2011.

(All the following estimates of deal values come from Tuchman.)

Brian To/FilmMagic via Getty Images

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Lance Armstrong and Nike

ESTIMATED VALUE OF DEAL: $10 MILLION A YEAR

When scandal strikes, celebrities and athletes often find their bank accounts take as big a beating as their reputations. Donations to Livestrong, the cancer charity that cyclist Lance Armstrong founded after his own battle with testicular cancer, fell in the immediate aftermath of the scandal. Last year, Nike said it would stop making products for Livestrong. It was a sign that Nike was further distancing itself from Armstrong, who it officially dumped as a sponsor in October 2012. Armstrong has also been formally stripped of his seven Tour de France titles. Nike worked with Armstrong for a decade and even produced a commercial in 2001 directly addressing the rumors of his alleged drug taking: “Everyone wants to know what I’m on,” Armstrong says in the ad. “What am I on? I’m on my bike, bustin’ my ass six hours a day. What are you on?” Experts say Nike had no option. “After all, ‘Just Do It’ doesn’t apply to doping,” says Adam Hanft, CEO of marketing firm Hanft Projects.

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Madonna and Pepsi

ESTIMATED VALUE OF DEAL: $5 MILLION

The year was 1989. Coca-Cola had signed George Michael, the former boy-next-door lead singer from Wham! And PepsiCo was fresh off its marketing successes with Michael Jackson and Whitney Houston. So the soda company signed Madonna in a deal widely reported at the time to be worth $5 million. But in January 1989, Madonna released the “Like a Prayer” video, in which there was a burning crucifix, which invoked the ire of some religious groups — even Pope John Paul II issued a statement asking people not to attend Madonna’s concerts in Italy. Pepsi ended up pulling an ad it made with Madonna because of the controversy surrounding her music video. Some marketing pros say the company acted too soon. “The Madonna controversy seems quaint in retrospect, given the language and content of the songs of Nicki Minaj, a current Pepsi spokesperson,” says Hanft. Pepsi did not respond to requests for comment.

Hertz

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O.J. Simpson and Hertz

ESTIMATED VALUE OF DEAL: $1.5 MILLION A YEAR

While some companies act too soon, others show surprisingly good foresight. Hertz had a marketing deal with O.J. Simpson from 1975 until 1992, when allegations about domestic abuse involving the record-setting running back first came to light. Two years later, Simpson’s former wife, Nicole Brown Simpson, was murdered, along with her friend Ronald Goldman. And even though a jury acquitted Simpson, Hertz’s decision to move quickly served the company well, experts say. “Dropping O.J. was a no-brainer,” says marketing consultant Robert Passikoff. “There was so much bad press no matter how you felt the 1995 trial went.”

Accenture

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Tiger Woods and Accenture

ESTIMATED VALUE OF DEAL: $10 MILLION A YEAR

Nike stuck with Tiger Woods after news broke of his extramarital affairs in 2009, but consulting company Accenture lost no time in axing the golf superstar. The global consulting firm was the first major sponsor to cut ties with Woods after a six-year-long relationship. Tuchman says his $10 million-a-year contract didn’t even count incentive bonuses for tournament wins. At the time, the company said in a statement that Woods was “no longer the right representative.” Marketing experts say the frisky “We know what it takes to be a tiger ” slogan for Woods’ commercials were particularly unfortunate and open to double-meaning. (Accenture declined to comment.)

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Gilbert Gottfried and Aflac

ESTIMATED VALUE OF DEAL: $100,000 A YEAR

Aflac hired comedian Gilbert Gottfried to provide the voice for the insurance company’s animated duck, but the jokes he tweeted about the Japanese earthquake in 2011 fell flat — and cost him. After an agreement that lasted 11 years — likely in the low-six figures per year, Tuchman says — Aflac terminated the contract. “Gilbert’s recent comments about the crisis in Japan were lacking in humor and certainly do not represent the thoughts and feelings of anyone at Aflac,” the company said. (Aflac declined to comment on the terms of the agreement.) Gottfried apologized “sincerely” for his tweets and regretted any offense caused. But it was too little, too late: Aflac gets most of its revenue from Japan and, as such, had no option but to act swiftly, says Jonathan Bernstein, president of Bernstein Crisis Management.

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Charlie Sheen and Hanes

ESTIMATED VALUE OF DEAL: $1 MILLION

In 2010, Hanes pulled its Charlie Sheen ad , in which he starred with Michael Jordan, two weeks after the actor’s arrest for domestic violence against his then-wife Brooke Mueller. The underwear company called it a “straightforward” call, but was criticized by some columnists for waiting so long. (Hanes did not respond to requests for comment.) For one commercial, Tuchman estimates Hanes paid up to $1 million. Neither that incident — nor his other erratic behavior — seems to have destroyed Sheen’s earning potential. He subsequently starred in a sitcom, “Anger Management,” on the FX cable channel about a former baseball player, and was hired for a Fiat 500 commercial in which he drove around a mansion where, according to the ad, he was under house arrest. The ad has over 4 million views on YouTube.

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Charlie Sheen and Hanes

ESTIMATED VALUE OF DEAL: $1 MILLION

In 2010, Hanes pulled its Charlie Sheen ad , in which he starred with Michael Jordan, two weeks after the actor’s arrest for domestic violence against his then-wife Brooke Mueller. The underwear company called it a “straightforward” call, but was criticized by some columnists for waiting so long. (Hanes did not respond to requests for comment.) For one commercial, Tuchman estimates Hanes paid up to $1 million. Neither that incident — nor his other erratic behavior — seems to have destroyed Sheen’s earning potential. He subsequently starred in a sitcom, “Anger Management,” on the FX cable channel about a former baseball player, and was hired for a Fiat 500 commercial in which he drove around a mansion where, according to the ad, he was under house arrest. The ad has over 4 million views on YouTube.

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